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The Sellout of America: Why Our Enemies are Thriving

March 31, 2010 by  

The Sellout of America: Why Our Enemies are Thriving

The Russians are coming. No, T-72 tanks are not plowing through Poland headed for Paris. There is no need for that outdated Soviet doctrine. Not when Russia can patrol near our coastal waters and harvest our most strategic resource—petroleum.

While the Obama administration seems bent on banning offshore oil drilling on the outer continental shelf, Russia is filling the vacuum, building its energy wealth and stretching its strategic reach all the way to Cuba and the vast oil pools that lay inside the Gulf of Mexico.

The Kremlin’s aim to be the world’s dominant power hasn’t changed since the Soviets tried to smuggle first-strike nuclear warheads onto the island of Cuba. But unlike First Secretary Nikita Khrushchev, today’s supreme leader Vladimir Putin is not gunning to win the arms race. He is out to win the energy race. So far it has been no contest.

Last year marked a milestone for the United States. For the first time since World War II, we pumped less than 5 million barrels of oil per day. We pumped almost twice that much oil 30 years ago when Jimmy Carter was president.

While Carter handed over the Panama Canal, Obama’s mistakes will be far more devastating to the U.S.

“Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries,” wrote The New York Times.

“What’s more, for all the surprise at just how high oil prices have climbed, and fears for the future, this is one crisis we were warned about. Ever since the oil shortages of the 1970s, one report after another has cautioned against America’s oil addiction.”

Yet the Obama administration has blindly ignored the warnings. The president continues to tout clean energy over offshore oil, even though seven out of 10 Americans want to drill for it.

Obama’s position on offshore drilling is as cloudy as the deep warm waters of the Gulf. As a senator he opposed it. As a candidate, Obama seemed to support it. But as president, Obama has stifled efforts to expand it.

This month The Washington Post said it now knows the president’s true intentions: “Hidden deep within the president’s budget proposal released on Feb. 1 are numbers that reveal his true intentions. The budget shows that revenues collected from new offshore leasing will decline over the next five years—from $1.5 billion in 2009, to only $413 million in fiscal 2015. If the president planned on expanding offshore drilling, revenues would be increasing, not decreasing. This budget clearly indicates that he has no intention of opening additional areas to drilling off our nation’s coast.”

Enter Russia—a nuclear mega power with a growing choke-hold on fossil fuel supplies. Last summer Russian Deputy Prime Minister Igor Sechin signed four contracts securing exploration rights in Cuba’s economic zone in the Gulf.

Havana says there may be 20 billion barrels of oil along its coast. That’s the total remaining conventional oil reserves of the U.S.

The Cuban deal will cement the Kremlin as the dominant petroleum power in the world. Russia already has three times more oil reserves than the U.S. Russia also has the largest natural gas reserves in the world—four times more than Canada and eight times more than Saudi Arabia.

“Vladimir Putin’s Russia is assembling an economic machine powerful enough to force Europe, the U.S. and Asia to their knees,” wrote The First Post. “It does not involve uranium, explosives or suicide bombers, but the natural resources that power the global economy. Russia will soon exert such sway over the supply of oil and natural gas that the OPEC crisis of the mid-1970s could seem trivial.”

Half of Russia’s state revenues and more than one-third its exports are derived from petroleum. Clearly Putin isn’t worried about cleaning up the environment (just one reason world carbon reduction agreements are useless and dangerous), but in projecting power. To that end Russia has surpassed Saudi Arabia as the world’s number one oil producer. The Kremlin also has its hands on the kill-switch to critical natural gas supply lines to Europe and Asia.

Meanwhile America’s dependence on oil is growing just as its availability is shrinking. The last time the U.S. produced such little oil Truman was President. And I can’t find one oilman in 100 that thinks the decline in American oil production is going to be arrested. As one Canadian oil company president said to me: “U.S. production in the lower 48 is falling into a black hole.”

What the Kremlin understands and what the White House doesn’t is that there is nothing on the horizon to replace petroleum. In fact, every four years, the U.S. consumes a cubic mile of oil. This has the energy equivalent of:

  • Four of the giant Three Gorges dams, cranking at full capacity for 50 years.
  • More than 30,000 1.65-megawatt wind turbines, cranking for 50 years.
  • A whopping 100,000 1-megawatt coal-fired electric plants, going full-bore for 50 years.
  • Fifty-two giant nuclear electric plants, running at 100 percent capacity for 50 years.

There aren’t in enough windmills or solar panels now or in 20 years from now that will significantly offset this demand.

What It Means
America is headed for an unmitigated disaster. Russia is bent on becoming the dominant petro-power of the world. Putin has gone so far as to say his country is an “energy superpower” and he has repeatedly demonstrated he will use his nation’s growing energy wealth as a blunt instrument of Kremlin foreign policy.

While Obama fetters away opportunities to drill for more oil, Putin is busy outflanking America on all sides. Russia is busy building closer relations with Iran and Pakistan, America’s key enemy and ally on the War on Terror. And in our own hemisphere Putin is about to meet with Venezuelan President and Uncle Sam hater, Hugo Chavez.

As for Cuba and its oil, it is just the latest energy domino to fall. There will be many more as Russia aims to dominate America, not with armies but with oil.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

John Myers

is editor of Myers’ Energy and Gold Report. The son of C.V. Myers, the original publisher of Oilweek Magazine, John has worked with two of the world’s largest investment publishers, Phillips and Agora. He was the original editor for Outstanding Investments and has more than 20 years experience as an investment writer. John is a graduate of the University of Calgary. He has worked for Prudential Securities in Spokane, Wash., as a registered investment advisor. His office location in Calgary, Alberta, is just minutes away from the headquarters of some of the biggest players in today’s energy markets. This gives him personal access to everyone from oil CEOs to roughnecks, where he learns secrets from oil insiders he passes on to his subscribers. Plus, during his years in Spokane he cultivated a network of relationships with mining insiders in Idaho, Oregon and Washington.

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